SMM China February Aluminum Output and March Forecast

According to SMM statistics, China's aluminum output was 3.333 million mt in February (29 days), up 7.81% YoY. The domestic daily average aluminum output were flat MoM at 114,900 mt. In February, downstream aluminum processing companies closed or reduced production due to CNY holidays. The share of aluminum liquid output fell by 6.1% MoM but rose by 1.6 % YoY to about 64.29%. According to SMM aluminum liquid ratio data, the domestic aluminum ingot volume in February rose by 3.21% YoY to around 1.19 million mt.

Changes in production capacity: In February, domestic aluminum smelters maintained steady operations. An aluminum smelter in Inner Mongolia was still resuming production after power outage forced it to shut down, which is expected to affect the output in March. There are no other large-scale production suspensions or resumptions. As of the end of February, the existing aluminum capacity was about 45.19 million mt, the operating aluminum capacity was around 41.99 million mt, and the operating rate grew by 4.8% YoY to 92.9%.

Output forecast: In March 2024, domestic aluminum smelters mostly maintained stable operations. A smelter in Inner Mongolia (operating capacity 860,000 mt/year) was still resuming production after power outage forced it to shut down, which is expected to affect the output. An aluminum plant in Sichuan (existing capacity of 125,000 mt/year) planned to shut down for technical transformation on March 10. The potlines will be closed by the end of March. Before the technical transformation, the company's operating capacity was approximately 65,000 mt, and the technical transformation was expected to be completed in September. In addition, Yunnan is still in the dry season. The local government encouraged industries to use more electricity and provided high-priced electricity. However, no implementation documents have been issued yet. Enterprises are estimating costs and may resume a small amount of production if a clear document is issued. SMM predicts domestic aluminum operating capacity may fall slightly to 42.09 million mt in March. The daily domestic aluminum production may inch lower. The total domestic aluminum production in March (31 days) is expected to be around 3.55 million mt, up 4.0% YoY. With the arrival of the traditional peak seasons, domestic demand gradually recovered, the production of aluminum downstream processing enterprises were stable, and the amount of aluminum ingot produced returned to normal. The share of aluminum liquid output in March may rebound to above 70%, up 6% YoY.